Business Bankruptcy: Choices for Small Owners

by: Attorney Noyes

11/17/20232 min read

In the challenging entrepreneurship journey, facing financial distress can be a harsh reality for small business owners. Bankruptcy, often viewed as a last resort, can be a strategic step towards restructuring and saving your business. At Noyes & Associates, we specialize in guiding business owners through the complexities of bankruptcy, focusing on Chapter 7, Chapter 11, and Chapter 13 filings.

Understanding Your Bankruptcy Options

1. Chapter 7 - Liquidation: This option is typically for businesses that do not see a viable path forward and wish to cease operations. Under Chapter 7, the business assets are liquidated to pay off creditors. It's a way to close your business with a clean slate, but it means the end of your enterprise.

2. Chapter 11 - Reorganization: Often chosen by corporations, Chapter 11 can also be an option for small businesses. This route allows the company to continue operating while restructuring its debts. It involves proposing a reorganization plan to creditors, including downsizing to reduce expenses or renegotiating debts.

3. Chapter 13 - Repayment Plan: Available to sole proprietors, Chapter 13 allows small business owners to keep their businesses running while repaying debts through a court-approved repayment plan. This option benefits those with personal assets tied up in their business.

Factors to Consider

Choosing the correct type of bankruptcy for your business involves several considerations:

• Business Structure: Whether your business is a sole proprietorship, partnership, LLC, or corporation will affect your bankruptcy options.

• Debt Load and Type: Your debt amount and type can determine the most appropriate bankruptcy chapter.

• Future Plans: Chapter 11 or 13 might be more suitable if you aim to continue your business. If closing down is the only option, Chapter 7 could be the way to go.

• Personal Liability: Sometimes, small business owners might be personally liable for business debts. Understanding how bankruptcy affects personal finances is crucial.

Navigating the Bankruptcy Process

Bankruptcy can be a complex legal process; each type has specific requirements and procedures. It's advisable to work with a knowledgeable bankruptcy attorney who can:

• Assess your financial situation and help you choose the right chapter.

• Guide you through the legal and procedural requirements.

• Represent you in negotiations with creditors and court.

Noyes & Associates: Your Guide Through Difficult Times

At Noyes & Associates, we understand small business owners' challenges and are here to provide compassionate and competent legal guidance. If you're considering bankruptcy for your business, contact us. Let us help you navigate these difficult decisions and work towards a solution that aligns with your business goals and personal needs.